Mumbai | Bengaluru: N+1 Capital has brought on board LetsVenture as the founding venture partner for its maiden $100 million funds, giving investors of the deals syndication platform an avenue to participate on the debt side of private markets.
N+1 Capital, a revenue-based growth capital firm founded by serial entrepreneur Rahul Chowdhury and Ashish Singla, has received approval for a Category-II Alternative Investment Fund (AIF) from the Securities and Exchange Board of India (Sebi) and will provide debt to high-growth startups in lieu of a percentage of the company’s monthly gross revenue.
The fund is in the process of raising $100 million in India ($75 million and $25 million greenshoe option). “We are looking at making the first close by the end of February and should have a final close by the end of the year,” said Chowdhury.
It is looking to back startups and micro, small and medium enterprises that have positive gross margins.
“Raising venture capital is not appropriate for every type of business – there are lots of startups and SMEs with strong and steady-state business models that get left out of the equity capital race. Our mission at N+1 Capital is to provide new-age entrepreneurs and asset-light businesses access to debt capital with flexibility,” Chowdhury added.
As the venture investing ecosystem develops, a lot of innovative financing products are expected to be launched in the country over the next decade.
“We have a data-driven risk assessment technology model that makes it accessible for new-age entrepreneurs and minimizes human bias in decision making. Startups that are operational for over a year and have a minimum monthly revenue of Rs 50 lakh are eligible to raise funds from N+1 Capital,” said Singla, managing partner, N+1 Capital.
According to the company, N+1 Capital and LetsVenture have already seen scores of businesses apply for funding and disbursements should commence shortly.
“LetsVenture is at a very exciting growth phase – we are today India’s most active investment platform with 30% market share and the highest liquidity. Now, with the N+1 offering on the platform, we will be providing the entire suite of fundraising products to startups – across equity and debt,” Nimesh Kampani, president of LetsVenture Plus said.
“Similarly, for investors on our platform (angels, ultra-high-net-worth individuals, and family offices) investing in N+1 provides a good opportunity for them to balance their private market portfolios between equity and debt,” he added.
Some of the advisors and mentors to the fund include Ranjit Pandit (former General Atlantic, McKinsey executive), Dr. Madhu Mohan (former Chairman, Invascent), and Rajat Gupta (former board member Goldman Sachs, P&G, Advisory Board Chairman of Bill & Melinda Gates Foundation). The fund’s advisory board consists of entrepreneurs, VCs, and turnaround specialists like Jason Kothari. LetsVenture’s Shanti Mohan and Kampani will join N+1 Capital as venture partners.
Revenue-based growth capital is common in the West, especially in Silicon Valley, but it has not found its way into India yet. It is an alternative method of raising capital for entrepreneurs with no equity dilution. Typically, startups and MSMEs with a steady growth trajectory and positive gross margins raise this sort of funding.
Published in ETTech on 15th January 2021 | Source: https://bit.ly/35HKZf7